Primary Energy Recycling Corporation Files Preliminary Prospectus in respect<br>of Rights Offering

    
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OAK BROOK, IL, Sept. 23 /CNW/ - Primary Energy Recycling Corporation (TSX: PRI) (the "Company") announced today that it has filed a preliminary prospectus in respect of a proposed rights offering to all shareholders (the "Rights Offering"), which was previously announced on August 24, 2009.

The Company intends to raise a total of US$50 million of equity by way of the Rights Offering. Rights will be issued to shareholders of record in Canada and the U.S. Further details of the distribution of the rights are provided in the preliminary prospectus which has been filed on SEDAR at www.sedar.com.

The Company has entered into a standby purchase agreement (the "Standby Agreement") with certain entities managed by West Face Capital Inc. (the "West Face Entities") and SOF Investments, L.P. ("SOF" and collectively with the West Face Entities, the "Standby Purchasers") pursuant to which the Standby Purchasers have severally agreed (and not jointly and severally) to purchase any subscription receipts that are not otherwise subscribed for under the Rights Offering. A copy of the Standby Agreement has been filed on SEDAR and is available for review at www.sedar.com.

Under the terms of the Rights Offering, common shareholders of the Company will receive rights to subscribe for common share subscription receipts of the Company. The subscription receipts will be automatically exchanged for common shares upon the Company obtaining debt financing, in an amount and on terms and conditions acceptable to the Company and the Standby Purchasers, acting reasonably, (the "Release Condition") which debt financing, together with the net proceeds of the Rights Offering will be used by the Company to refinance its US$131 million term loan facility (the "Term Loan"), due to mature on February 24, 2010. If the Release Condition is not satisfied on or before February 23, 2010, and in certain other limited circumstances as described in the prospectus, the subscription funds will be returned to investors and the subscription receipts will be cancelled.

The subscription price, the record date, the expiry date, and the number of rights required to purchase one subscription receipt will be determined prior to the filing of the final prospectus. The Company will make a further announcement with respect to these matters at the time of the filing of the final prospectus. The subscription price, which was determined by negotiation between the Company and the Standby Purchasers, will be equal to the lesser of (a) US$0.70; and (b) 0.50 multiplied by the volume-weighted average trading price of the common shares on the Toronto Stock Exchange for the 25 calendar days ending on the business day immediately preceding the date the Company files the final prospectus in respect of the Rights Offering, converted to U.S. dollars and rounded down to the nearest U.S. cent.

The Company is currently working diligently towards obtaining debt financing commitments in an amount which, together with the net proceeds of the Rights Offering, would be used to refinance the Term Loan. Although the extended maturity date of the Term Loan is February 24, 2010, the Company is actively working to close the new debt financing and refinance the Term Loan by year end; however, there can be no assurance that the Company will be able to secure such commitments.

Further details concerning the Rights Offering and the Standby Agreement are contained in the preliminary prospectus, which has been filed on SEDAR at www.sedar.com.

This press release is not an offer to sell or the solicitation of an offer to buy Rights, Subscription Receipts or Common Shares. Such securities may not be offered or sold in the United States absent registration under the United States Securities Act of 1933, as amended, or an applicable exemption from the registration requirements.

Forward-Looking Statements

When used in this news release, the words "anticipate", "expect", "project", "believe", "estimate", "forecast" and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks, uncertainties and assumptions pertaining, but not limited, to the completion of the Rights Offering, the refinancing of the Term Loan and the other risk factors discussed in the Company's public filings available on SEDAR at www.sedar.com. These forward-looking statements are made as of the date of this press release and, except as required by applicable securities laws, the Company assumes no obligation to update or revise them to reflect new events or circumstances.

About Primary Energy Recycling Corporation

The Company owns a majority interest in Primary Energy Recycling Holdings LLC ("Primary Energy"). Primary Energy, headquartered in Oak Brook, Illinois, indirectly owns and operates four recycled energy projects and a 50 per cent interest in a pulverized coal facility (collectively, the "Projects"). The Projects have a combined electrical generating capacity of 283 megawatts and a combined steam generating capacity of 1.8 MMlbs/hour. Primary Energy creates value for its customers by capturing and recycling waste energy from industrial and electric generation processes and converting it into reliable and economical electricity and thermal energy for its customers' use. For more information, please see www.primaryenergyrecycling.com.

For further information: V. Michael Alverson, Chief Financial Officer, Primary Energy Recycling Corporation, [phone], [email protected]